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Scaling Up Excellence

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Bob Sutton: Good morning. I’m Bob Sutton. As advertised, I guess I am the author of The No Asshole Rule. We’re not going to be talking about assholes this morning, but I’ll be around later if you want to talk about them more. One of the curses of writing a book with this title is no matter what I do, I will always be known as the asshole guy. I accept that. It’ll be on my tombstone. But actually, I’m interested in other things, too.

What I’m going to talk to you about this morning is a topic that my colleague Hayagreeva Rao, everybody calls him Huggy. Huggy Rao and I have been working on kind of intermittently the last five or six years doing case studies. We’ve done a number of classes at Stanford, a lot of reading. We sort of have developed this perspective on what it takes to scale up excellence. One thing that I’m excited about especially with the Agile folks to be here is that this is a topic. There’s books on scaling up Agile. It’s a very big issue in the case of Agile, having to spread it from one organization to another, to spread it around.

This is very similar to the challenge that my colleague Huggy Rao and I have been wrestling with. This is the way we would define it is an organization has a center or center of excellence, and the challenge is how do you spread it from the few to the many without messing it up. Another way that we sometimes describe it is these are situations where the main thing that’s wrong with it is that there isn’t enough of it.

Just to give you some sort of examples, the sort of thing we’ve literally collected so many cases, we’re trying to figure out the best balance to put in the book, but here’s some of the ones we’ve collected. Those of you who are NASCAR fans will know that Hendrick Motorsports is one of the top teams in the game, particularly Jimmy Johnson is their most famous driver, most famous team. Hendrick is interesting because, whereas most NASCAR teams will have one or two teams, they actually have four. In doing some case studies and talking to them, they’ve had this challenge of moving from two to four teams and maintaining the excellence. That would be one example.

In a different kind of organization, there was a little company that started in one of our classes at Stanford called Pulse. Those of you that have iPhone and Android apps, it’s kind of a little news app. These two campus [inaudible 00:02:45] and [inaudible 00:02:46], they wrote an app during class, and by the end of the 10 week class, they actually $360,000 in revenue. Things looked pretty good. They got some venture capital money. The last time we went and talked to them a couple months ago, it was like well there was four of us, now there’s 20, it’s actually pretty difficult to deal with all these people. Another example.

McDonald’s sort of the master of scaling. If you want sort of world dominance right now. McDonald’s corporation is in the middle of trying to figure out how to open 1,460 stores in China, so that would be a scaling example.

Then a final one, which I think gets closer to some of the challenges that happen in Agile, is my colleague Huggy Rao, a few years ago, wrote a case study about something that I’m still amazed it hasn’t gotten more publicity, although it’s gotten some. It’s called The 100,000 Lives campaign. What this was was a challenge that happened in about 2004, 2005, to get US hospitals to adopt very simple practices, like doctors washing their hands, things like that, to try to prevent deaths in hospitals that were actually possible and easy to prevent. If you look at the evidence, it does sort of seem like the deaths in US hospitals went down about 100,000 during that period, the preventable deaths.

I just offer this to give you a sense of the kind of problems that we’re looking at. The thing that really runs through it, and I’ll talk about a lot of nuances, but the reason I wanted to start with this is because in reading the Agile stuff and talking to folks like Mitch about it and the like, in fact, even in one of the chapters he sent me that he wrote, this idea of mindset keeps coming up when it comes to Agile.

Even before we knew that was a big issue in Agile, the thing that kept striking us when we looked at well what were the characteristics of situations where organizations, networks of organizations, successfully scaled excellence from the few to the money, the thing that would come up over and over again was that instead of just focusing on growing as big a footprint as possible, putting their label on as many things as possible, what really was a sign that it was sticking was that people shared the same mindset, the same beliefs about what they should do, what they should not do, and why, and to be clear, at least for the organizations we’ve studied, sometimes they’ll have completely opposite mindsets, but that can be quite functional.

To give you an example from the software tech world, we all know about Apple computer and how secretive it is. I’ll talk about this a little bit later, too. It’s one of the easiest places on earth to get fired, if you even have a little bit of a slip. I would say that secrecy is one of the most sacred things they have there. In fact, in your initial employee training, they have this little session that’s called sacred secrecy.

Conversely, one of the companies I’ve been working with for years, and particularly the CEO or former CEO John Lily, if you know about Mozilla Firefox fame, there it’s all about openness, and openness is sort of sacred.

To me those are both part of the mindsets, and that’s the way people think, and it guides their behavior day after day. Now, this quote, which is directly from Mitch [Lacey’s 00:06:19] articles, “Agile requires a shift in mindset,” and I really like this quote from this book on scaling software agility, and it’s this notion that just by reading a book, just by going to a speech, just by talking about something, that’s not enough to make Agile happen. It’s sort of something you’ve got to practice and develop day after day after day. From what we can tell, whether it’s doing things like running a McDonald’s restaurant or spreading medical practices that prevent deaths, this is the story of what happens when great things scale. People don’t just talk about them. They live by them. That’s a theme I’ll get back to over and over again.

The other thing I was going to say about this, and we’ve been sort of using this metaphor lately is that when we look at cases of effective scaling and consistent with this notion that it’s something that you grind away day after day, we’ve been talking about this notion that scaling requires sort of fighting a ground war, not just an air way. One thing that happens, and frankly, with some of the companies that I’ve worked with that have done the worst job of scaling things. There’s one company in particular that I worked with a while. They were trying to scale design thinking and trying to make their software products, trying to make them more user friendly and the like. What they did is they brought everybody in the company in a conference room this big and said they were going to do it, and then nothing happened. That, to me, is the classic air war. You’re blasting them with PowerPoint slides and speakers, but nothing happens afterwards. When you really get scaling you get people sort of grinding it out every day.

To give you an example, I’m going to talk a little bit about Facebook. Facebook, as we all know, it’s sort of an interesting case. At Stanford, I have a lot of contact with the folks at Facebook, especially on the engineering side. But when I first started following them, they were like the rising darling. Now it’s unclear whether they’re going to go the way of AOL or go the way of Google or Apple. Of course, everybody’s fighting about that. One thing that is interesting about Facebook regardless of their future fate is the way that they do employee onboarding in particular and in general, really from the very beginning when it was just Mark Zuckerberg and a few folks, they really had this perspective that when somebody comes aboard, we don’t just want somebody who’s a good programmer. We want to basically brainwash them in the mindset that we think it takes to be successful at Facebook.

You probably have seen some of these numbers, but since 2005, Facebook has been roughly adding two million users per week. I guess they’ve got 920 million users now. There’s a lot of pressure for them to keep adding engineers, designers, programmers and so on. Despite or perhaps because of all that pressure, about four years ago, a group of engineers got together and said essentially we’ve got to do a better job of brainwashing our new employees. This was driven by engineering. Human resources had virtually nothing to do with it. So there were two folks in particular, Mike Schroepfer, who’s head of engineering, and a guy named Chris Cox, who’s sort of been around forever. Basically, from what I can tell his main job is being Mark Zuckerberg’s best friend and closest confidant.

What they did was they designed something that they called bootcamp. The way that bootcamp works at Facebook is when you come on as a new engineer, the concept is that you’re going to work in the first six weeks on 12 or 13 short projects. Chris Cox, who’s quoted here on the slide, Chris Cox has this sort of concept, which is you’ve had a successful first week of Facebook if you can make a change in the site and show your mother. That’s his success criteria. This is rhetoric from an interview with Chris, it’s the idea of touching the metal, understanding the whole code base, this notion of moving fast and breaking things, which is very much part of the Facebook engineering culture.

The concept of bootcamp, although it certainly helps them figure out what would be the best position for you, it does help weed out some employees who probably shouldn’t be at Facebook, not too many, but the main purpose of it, we talked to Chris Cox and [inaudible 00:10:59] and other engineers, the focus is to inculcate people with the Facebook mindset, so you don’t have to, if you will, monitor them too closely.

You’ve got this notion that in growing the footprint, and the number of people at Facebook now just amazes me. I remember when there was 20 or 30 of them in downtown Palo Alto. The idea is to inject that mindset in their brains.

All that stuff about mindset, one thing that also does strike us, and with Agile, I’m sure this will be an issue. It’s an issue everywhere. No matter how great a mindset you’ve got now and no matter how great things are going, there’s this never ending danger that it’s going to go bad.

One of the organizations, just to give you a little cautionary tale that seems to kind of be coming out of this, but maybe not quite, is the famous Starbucks coffee. Where I first experienced this first hand, this was in 2007, and a couple of my colleagues and I went over to something called the Higher College of Technologies there in Abu Dhabi. We were teaching a creativity workshop. It was sort of a small workshop. There’s maybe 30 folks in the room. We’re having them doing brainstorming and all this other innovative stuff. The interesting thing in the back was there were two Starbucks employees sitting there all day. We went back there the first morning and tried to eat. We noticed three things immediately, which was the coffee was luke warm, the rolls were hard, and the orange juice actually tasted rancid, okay.

That was bad enough. It’s like disgusting Starbucks product, but as we went throughout this workshop, we realized that they spent most of the day in the back of the room with their heads down sleeping. To us, this is not the excellence of Starbucks. At least, I remember when they first came out in the eighties, at least when I first encountered them.

The interesting thing about Starbucks is it wasn’t just us as random customers in Abu Dhabi who noticed this, Howard Schultz, the founder, former CEO, and now he fired the other CEO and has taken over again. Howard Schultz noticed this. There’s this great memo called the onward memo he released. There’s this great quote. “Over the past 10 years, in order to achieve the growth of development and scale necessary to go from less than 1,000 stores to 1,300 stores,” he goes on to say, “we’ve made these decisions that have lead to the watering down of the Starbucks experience.”

This is the case that in this sort of lust to get this huge footprint, the mindset and the commitment to excellence really has watered down. That’s always one of our big cautions when we work with companies or other organizations, they always want to get as big as possible. They get so excited about their growth, they start leaving the excellence behind.

All right, so what I’m going to do … I guess I’m going to talk probably another 45 minutes or so. What I’m going to do is first I’m going to talk about three key choice points we see in scaling over and over again and present those to you, and it will be interesting to see how they apply to scaling. Then we’re going to talk about seven scaling principles that we’re developing.

Here’s the first choice point and one we keep seeing a struggle between, which is the trade off between more and better. Of course, in a perfect world, you want to have as big a footprint as possible, and you want it to be perfect at all times, but the fact is this is a classic strategic trade off when you’re trying to spread excellence from the few to the many. The first problem is the thing that makes this difficult is something that we call the voltage loss problem. You have a little center of excellence, but as you transfer the ideas to other places, something is lost in translation, and the question is is that worth it?

I hate to say bad things about my employer, Stanford University, but we have a hospital, which actually has a history of having problems with infection rates. That means you come in healthy, but during the process of being in the hospital, you get an infection that makes you sick. In talking to the folks at the Stanford hospital, they’ve actually had a lot of problem with their term, voltage loss, where there will be a great unit, but the means that they’re using to stop infections is not transferring well to other units. That’s one problem.

Another problem, and this has to happen in Agile or anything else new, is the learning curve problem because if you’re in a situation where people are doing something new and spreading out some form of excellence that’s in a pocket, it’s going to take people a while to get good at it. This doesn’t just happen in things like opening up a restaurant, like a Domino’s restaurant, where the quality of the food goes down a little bit the first year. It happens in things like surgery, and speaking of Abu Dhabi, I was talking to a guy named Toby Cosgrove who’s the CEO of the Cleveland Clinic, a renowned clinic in Cleveland, one of the best heart places on earth. They’re opening a new clinic in Abu Dhabi, and I said to Toby, I said, “What’s going to happen when you guys go to Abu Dhabi? Aren’t you guys going to have a higher mortality rate?” He said, “Yeah, there’s no avoiding it.” Hopefully it will be better than what they have there now, but there’s always a learning curve.

The last sort of choice between more and better for teams or organizations that are running something like this, is the problem of just cognitive load or pure burden that as you as a management team start spreading wider and wider, just the pure weight on you gets to be too much. This can be everything from, I’ve got a little restaurant near where I live called John Bentley’s, and John Bentley who’s a classic owner/chef, he tried to open two restaurants. That was too much for him. So he’s back down to one.

On the other extreme, Google, and I was just actually talking to somebody before, and Google’s a company I’ve been around a long time being in the Stanford engineering school. Actually, Stanford University president, many of you may know, John Hennessy, is actually the lead board member there. We’ve been following them for years. They’ve got this don’t be evil thing which is their polite version of the no asshole rule. I love Google, and they still are actually very nice. Even their lawyers are really nice, but I sometimes worry as they get bigger and bigger and bigger if it’s going to be possible to sustain that.

Just as a sort of reminder, and one of my former students, Xaio reminded of this, Xaio Wang is, that sometimes, it’s worth having the voltage loss. He uses this great example of charter schools because he’s now a management consultant, but for a while, he was working as an administrator in the New York City schools. I was asking him about the problem of when you have a great charter school, and you opened up a new one, and you lose a lot of excellence, and Xaio being a smart Stanford grade had this great quote. “Wouldn’t it be better if we spread inferior imitations that were half as good as the great schools, but twice as good as what we have now?” Sometimes it’s worth accepting that loss of excellence.

The next choice point, and this is certainly something I see with Agile. This is partly well do we do it with consultants or not? This is the question of whether or not you do it alone versus with others. Certainly in an open source world, that’s certainly a decision like Mozilla, to do it with others. Some of the situations that we’ve looked at, one company in particular that I’ve worked with over the years is Procter & Gamble. Under A.G. Lafley, their CEO, they got into sort of radical collaboration to the point that at one moment, they actually got involved in cooperating, doing a collaborative deal with one of their closest competitors, Clorox, and they came up with a product called Glad Press ‘n Seal that came from both organizations, even though it was a competitor.

Then kind of on the other extreme, another Bay Area company that I know, and we’ve been doing interviews at is Pixar. If you talk to Pixar, although Disney will do stuff like distribute their films, do advertising, when it comes to actually making their films, they’re pretty much the opposite of the rest of Hollywood. The way that the rest of Hollywood works is for the most part, a film is made by temporary organizations that’s just assembled to do the film, and then the organization is disbanded. In the case of Pixar, the 1,200 or so people in Emeryville, those are all the people who make the film. When you go to Emeryville, even things like the security guard, the receptionist, there’s no outsourcing. They all are Pixar employees. The receptionist at Pixar can usually tell you more about how great or not so great the next Pixar film is going to be because they’re all part of the system.

That’s a design choice that’s important. The third one is one that we got quite obsessed with because of my colleague, Michael Dearing. I guess sort of the catchier and even partly wrong, but I like a version of this is Catholicism versus Buddhism. It’s also replication versus localization. Here’s how we started getting interested in this.

There’s a unit [inaudible 00:20:29] at Stanford that I helped start. It’s called the Stanford d.school or the [inaudible 00:20:33] institute of design. What we do at the d.school is we apply design thinking, creativity techniques to all sorts of problems, everything from designing ways to make water better in developing countries, to things like having students spin out and do startups. Pulse actually came out of one of our classes.

In the very early days, we’re having this conversation, and there was this guy, George Kimball, who’s our executive director, and sort of a real design [inaudible 00:21:05] leader. We brought in a guy named Michael Dearing who still teaches there. Michael’s an interesting guy. Besides being raised Catholic, he also had been head of eBay North America for at seven or eight years. He sort of understood a whole bunch of different things. What he said to George Kimball, he said, “For the Stanford, d.school, is it Buddhism or Catholicism?” Because his perspective was that if we follow the Catholic model, the idea would be well we would be like Rome or the Vatican, and whatever happened at Stanford, our goal would be to spread out exactly what we did at Palo Alto, so it was replicated perfectly at every place that we mentored.

That’s one extreme. He said, “Or is it Buddhism?” What Buddhism means from his perspective is you sort of have a vague set of underlying notions, beliefs, assumptions, a mindset, but you allow all sorts of local customization. This one decision they agreed to, which is to insist that everything be done exactly the same way, versus allowing variation and local customization. It’s a decision that constantly haunts people who scale at least everything we’ve studied.

Just to give you a range, on one extreme, there’s a lot of cases where cranking out the clones really does seem to work. Certainly it works in manufacturing settings. Those of you know how Intel plants work, they have this philosophy called copy exactly. Every plant’s supposed to be exactly the same. Some more, not so much manufacturing based one, See’s Candies, they have this philosophy that every See’s candy in the store needs to be exactly the same. In fact, I was talking to somebody from See’s candy about See’s candy in Texas since we’re in Texas. She said, “Well a few years ago we opened See’s Candies in Texas, and they didn’t work, so we just pulled them out.” I said, “Would you ever customize them so they sort of fit Texas?” She said, “No. Either they work in a market, or not. That’s our philosophy.” The other restaurant that fits this is In-N-Out Burger where they don’t do any local customization either.

That’s one model, but there’s a problem with it sometimes when you start moving it to other markets, other situations, what works in one place may not work in another. When that doesn’t happen, they call it the replication trap when you crank out the mindless clones, you end up having a problem because they don’t work in the local environment. The classic case is what happened when Home Depot tried to open stores in China.

Those of us in the United States, at least most of us, know the Home Depot philosophy is do it yourself. You go in there, you do your weekend project. Well when they opened these 14 Home Depot’s in China with the do it yourself projects, they just all failed and flailed. There were two reasons. One is China is not a do it yourself culture. It’s a do it for me culture. Most people in China are not raised with that mentality or the tools. The other thing, as anybody who lives in China can tell you, if you live in China, and you’re rich enough to shop at a Home Depot store, labor’s so cheap, it’s really easy to get somebody to do the work for you. They had to reconfigure things.

Then on the other extreme, what I would say is the most Buddhist approach. The most Buddhist approach is you sort of give people an attitude, a mindset, and you say to them, just implement it in a way that it fits the context you’re in as well as possible. One example of this, there’s a little pilot study done in Bay Area hospitals to reduce drug treatment errors a couple years back. The idea was that they got together, they’re were nine different nursing units, and what they said was okay what your job is to do is to stop interruptions and distractions. There’s a lot of evidence that shows that when you’re in the hospital that if the nurse gives you the wrong drugs or doesn’t give you the drugs at all or give you too big of a dosage or something, it’s nearly always because they were distracted or interrupted somehow or another in the process.

They just gave nurses free reign and said see what you can do in your nursing units. As the slide said, errors went down by 88%, and they used a really wide range of approaches. In the picture here, this is one of the hospitals. What they did was a quiet room where when the nurses were sorting the drugs, they’d go off and sort them without being interrupted, but in another hospital, what happened was they actually did it out in the ward, and they put on these little vests that say do not interrupt. In talking to them, the reason that this was important to do in this particular ward was it was a neonatal intensive care unit, so there’s little tiny sick babies, and the nurses didn’t want to get too far away from the kids, but they wanted to have a way to show don’t interrupt me now, I’m doing something with drugs. This is a little corner of the unit, but right behind her, if you turn around, you see all the little babies.

Okay, so those are the three decisions. What I’m going to do now, this will probably take me to about 10 o’clock, and then we can start doing Q&A is to talk about some scaling principles that Huggy Rao and I have been futzing with, sort of things to keep in mind, techniques you can use, spread excellence from the few to the many.

Let me start with the first one, which actually comes from Huggy Rao’s research on social movements is where it started. Here’s the basic problem. The principle is to link hot causes to cool solutions, but the basic problem is, as I think everybody in this room knows, although sometimes many of us are loathe to admit, human beings are actually incredibly irrational. It’s political season, maybe we should all keep this in mind, that logical, rational arguments don’t actually work that well, and getting us sort of riled up about stuff, maybe a few of us. It actually turns out, lots of researchers support this, that if you want to get people going about something, what you want to do is get them angry, you want to get them upset, you want to get them emotionally cranked up.

But there’s a problem, which is that if you just get people emotionally cranked up, and they have nowhere to direct that energy, then either they do nothing, they do something destructive, they can do damage. There’s this sort of one-two punch, and this is especially important in the early stages of kicking off anything where you want to have a lot of social involvement. There’s this notion you sort of need to do two things. First, you got to have a hot cause to get people all riled up emotionally. Second, you’ve got to have cool solutions to link that to to channel their energy.

To go back other the institute and health improvement 100,000 Lives campaign, Don Berwick who lead this, did this brilliant thing. The way he kicked off the campaign, an 18 month campaign, is he brought together 4,000 healthcare professionals from a lot of different hospitals, from insurance companies, doctors and so on, and although the campaign was based on getting hospitals to use six different simple evidence based practices to reduce deaths in hospitals, he didn’t just start off by talking about evidence based practices.

The first thing he did was he got a woman named Sorel King on the stage, and Sorel King’s daughter Jody died at John Hopkins hospital as a result of a series of preventable medical errors. It’s like a whole bunch of disconnected ones. She sort of told her story and got the emotion cranked up. Then they brought out a woman named Sister Mary Jean Ryan, who is head of one of the largest hospital chains in Florida. She’s a nun. Essentially as Don Berwick told Huggy Rao, the sister’s message was if you don’t join our campaign, you’re going to go to hell.

That’s pretty good, you know? Then, so you get the emotions cranked up, but the key thing was a whole bunch of structural and followup things were done to get the hospitals to use these six different simple evidence based practices. If you look at it, it’s amazing how simple so many of them are. I already mentioned hand washing. It’s amazing how dirty doctors hands are and nurses. It’s pretty scary on average, still. The other thing they did was it turns out when somebody’s on a ventilator in a hospital, if the vent isn’t up at least 45 degrees, the chances of pneumonia are much higher. It’s like four or five times higher. They would do stuff, like they’d paint a stripe on the wall and tell everybody, not just the nursing staff and the doctors, but the family, the other patients in the room, make sure that someone doesn’t come in and lower and flatten this bed because sometimes relatives will do that. They’ll walk in and try to make the person more comfortable and make them more flat.

But the key thing here is you’ve got the hot cause and the cool solutions and to give you a sillier experience, Huggy and I taught a class last term trying to improve bicycle safety in the Stanford campus. If any of you have ever been to the Stanford campus, one of the great and sometimes terrible things about it is it’s a campus where all sorts of people are whizzing by on bicycles all the time, and in particular, and it’s really interesting. You can kind of split them. It turns out that faculty members, staff members, and graduate students, all wear bicycle helmets for the most part. Among the undergraduates, it is just not cool to wear bike helmets. Our provost, John Etchemendy, it turns out he’s not a King bicyclist, it turns out that when some child gets brain damage or gets mangled in a bicycle accident, it’s usually his job to call the parents and tell them what happened, so he’s very concerned about bike safety.

We worked with a class. We had about 60 students. We broke them into six person teams. Their job was essentially to run around Stanford and to do stuff to increase bike safety, using actually the scaling principles you just saw. The coolest team, at least I thought the coolest team, they were called The Watermelon Offensive, and what they did was they worked with the Stanford men’s soccer team. That’s where they started. The first day, they came to practice, and see the Watermelons, they smashed the watermelons all around the practice field. That’s sort of a hot cause that could be your brain. Then they did stuff, and each one of their bicycles, they had this little tag, which they tied to the handlebars that showed somebody lying next to their bicycle with a watermelon broken to their head.

They got the emotions going, a little bit of silliness, and then they had bike helmets for sale for seven dollars. They were subsidized by fancy Stanford University [inaudible 00:32:05], we have too much money I think. They have the hot cause, and the cool solution. They told them they could get the helmet for seven dollars if they signed a pledge to both wear the helmet and to tease and humiliate and actually to throw watermelons at the people on the team who weren’t wearing the helmet. It’s pretty cute. It’s kind of Stanford. The students would go to practice every day both to make sure they were wearing the helmets and to give them watermelons to throw around and everything. They got 100% compliance on the men’s soccer team. And then the men, they brought the men over, and then they converted the women’s soccer team. Then the term ended, so that’s as far as they got. I like this because students did such a sharp job of doing the hot cause and then having the cool solution.

Okay, so I have to have the perfunctory Steve Jobs story. This is a good one. This comes from my friend, John Lily. One of the key things, if you want to have a hot cause, and boy in reading this XP Agile Scrum stuff and looking at Waterfall, you guys have an enemy, so it’s good you have an enemy. One of the characteristics of social movements, any kind of change it spreads, is people find an enemy to declare war against. Jobs was the master of this. This is from John Lily’s blog. Those of you who want to read a great blog, John, he’s now a partner at Greylock, but he was a CEO of Mozilla for a long time. He writes a great blog, called John’s Blog.

I love this description of the first all hands meeting at Apple when Jobs got back. Someone in the audience asked him about Michael Dell’s suggestion a few days previous in the press that Apple should just shut down and return the cash to shareholders. As I recall, Steve’s response was, well you know what the F word is, “F Michael Dell.” It’s sort of interesting because he might say the same thing about Dell right now having used their products recently to be snide.

Anyways, good God, what a message from a CEO. He followed it up by admitting that the stock price was terrible, and it was terrible, and they were going to reissue everyone’s options at a low price. You got the enemy, and you got the solution. He said, “If you want to make Apple great again, let’s get going. If not, get the hell out.” Then John describes so everybody left feeling all charged up about following their renewed leader.

In this, you see these two elements. You have the hot cause. In this case, it’s great to have an enemy to declare war on, but then there’s also the solution where they were doing things with the stock to lock people in longer.

That’s the first one. The second is one we’ve already talked about, but it’s like I can’t emphasize it enough. In all the stuff I’ve been reading about XP and Agile and Scrum and stuff, this notion that if you try to convince people how great anything new is, just by talking to them about it, you’re probably going to fail, or it’s certainly going to happen a lot slower.

The way that human beings change, the way that they adopt a new mindset, a new way of thinking, is you get them to do actions that are consistent with the direction you want them to go, and one thing that people who do brainwashing will tell you, and I mean brainwashing everything from prisoners to people who do corporate culture inculcation, whatever you want to call it is, what people say doesn’t matter so much as what you’re actually somehow or another persuading them to do. In the case of bootcamp at Facebook and talking to Chris Cox, Chris Cox, if there’s anybody who is the most articulate and motivated sort of cheerleader for the Facebook culture, he’s even worse than Zuckerberg, although he’s sat next to Zuckerberg for yours. Chris will always say, “We’ve learned that what we tell them doesn’t matter. It’s what they do, especially during their first couple of months.”

To give you an example of how this played out in one organization, we did a case study. Many of you may remember that in 2007, actually Valentine’s Day 2007, there was this horrible incident with Jet Blue airlines where there was a weather problem. The whole system, Jet Blue, broke down, and there was thousands of thousands of people stuck on planes in Kennedy airport. Many of them were freezing. It was just this horrible situation.

Well it turned out that Jet Blue tried to fix this actually with a top down approach a couple of times and pretty much failed. It finally got fixed, and I’m happy to say this is a great friend of mine and a great person, Bonnie [Simmy 00:36:45]. Bonnie’s this amazing pilot. Well she’s still an active pilot. She first flew through United for years. She quit, by the way, because she couldn’t stand United at all anymore. Then she went to Jet Blue for a 50% pay cut. She’s also a three time Olympian in the luge and is a sportscaster, now she’s a Jet Blue executive. She’s actually head of talent now. She’s still flying.

But at this point, this was about three or four years ago, she said she just couldn’t stand how screwed up the system was and how nothing was being done, so what she did was without budget, she gathered 24 people and said let’s try to fix the problem. Let’s try to fix, sort of scale up a system where when there’s weather problems, we know in advance, we can shut Kennedy or another airport, and have it be as smooth as possible, and also restart the thing as quickly as possible.

She got her 24 favorite people in the room, and had them essentially do a kind of process map of the steps that they would need to go through to shut down and reopen Kennedy without having a nightmare. She asked them about this. There’s 24 people here, and she said, “How many of you think we’re going to succeed?” Not a single one of the raised their hand. She didn’t have the attitude at all. She said, “Just do me a favor. Let’s just spend the day sketching out what the solution would look like and start doing it.”

She said after meeting with them, by the end of the day, they were willing to go to one more meeting, and then one more meeting, and eventually they sort of solved the problem. This was a situation where it wasn’t like she changed her beliefs and then their behavior changed. She just got them to change the behavior, and I suspect with XP or Agile or Scrum, with all this sort of stuff, no matter what people are saying, get them to do it, and kind of just ignore them for a while, and see what happens to them. It can be very powerful. Resistance is not always a bad thing because at least it means that people are cranked up emotional about what you’re doing.

The next one is something that we’ve been quite obsessed with because a lot of times what happens when people scale out or spread out change is they make it so complicated that we as human beings, we just get overwhelmed by it. We just can’t deal with all of it. There’s an enormous amount of evidence that when you put human beings under excessive cognitive load, we get stupid. We make mistakes. We can’t think in any depth. It’s really quite bad for us.

This is one of the reasons one of my favorite CEO’s I already mentioned, A.G. Lafley, during the period when our large financial firms were leading the world to ruin, he was running a company under the motto, “I keep it Sesame Street simple,” and I think we would’ve been better off if they did that as well.

To give you an example, and this is just a little study, but it shows the danger of giving people too much cognitive load and how we forget to do what we believe is right, perhaps. This is my colleague Baba Shiv at Stanford. He does all these really cute experiment. This was a cute experiment where he wanted to show the effect of cognitive load on people and how it undermines their decision making.

What he did, I’m on this stage, probably a room about as big as this stage. On one end, he’d have him stand there, and they’d have to memorize one of two numbers, a two digit number like 16, or a seven digit number like 3242257. Their job was to walk to the other end of the room, and to tell the experimenter at the other end of the room the number they were just told, but they got to have a snack along the way. The choices as Baba’s picture shows were fruit or cake. They were randomly assigned. This wasn’t personality. The people who had to remember the seven digit number had more cognitive load. They ate like three times as much cake.

If you start thinking about it, it’s just a little more cognitive load, the impulse control and the thoughtfulness gets ran away. That’s just a little sign of how dangerous cognitive load can be.

To turn to the real world, you shouldn’t be able to read this very well, and to show what can happen in organizational change project or initiative, one of the companies I’ve been hanging out with for some years is Intuit, and there’s a woman named [Harran 00:41:12] [Hanson 00:41:14], and her along with Scott Cook who’s the largest shareholder and co-founder of the company, they’ve been pushing this program that they call Design for Delight. The basic idea is to be more empathetic, to have more user friendly products, things like that. This picture, which is impossible to read, and don’t try, this is their initial effort to roll out the Design for Delight process to a group of people at Intuit who is about as big as you are, really a lot of people. Let me read you the title even. I have to squint to see this. Evoking positive emotion by going beyond customer expectations and ease and benefit throughout the customer journey. Design for Delight.

As [Carren 00:41:55] will now admit, and [Carren’s 00:41:56] great. She’s completely open about stuff. When we first started rolling this out, although everything in it was reasonable, it was so complicated people would just shut down.

What they learned after about a year was to go simpler, and this is the current Design for Delight process. Little more simple, huh? Do you like this? They like this. All right. You don’t have to do all three of these. Just any one of these three, just deep customer empathy, like [Carren 00:42:24] says, you qualify. The interesting thing [Carren 00:42:27] says if you actually look what happens to the people who are masterful at this, they, I don’t know how to go back, but they do all the stuff you see here, but they just feel less overwhelmed when they start out with this. To me that’s a real world experience of being aware of cognitive load and complexity.

Okay. But there is another issue, which is that when you’re scaling up anything, any system as it gets larger and more complex, the fact is that you can only make it so simple. You’ve got to find out some ways to deal with the complexity, given the inevitable. There’s all these units. There’s all these activities. You got to find ways to coordinate them. You need rules. You need roles. You need to divide people up. One of the best expressions about this, this is another great blog if you want to read one. This is by a guy named Ben Horowitz who’s a venture capitalist at Andres and Horowitz. He’s got about three billion dollars to give away. One of his mottoes about scaling is, “You’ve got to give ground, but you’ve got to give ground grudgingly.”

Just for example, one of the things that he always talks about as one of the biggest problems is you should avoid pre-populating your organization with all sorts of roles and rules before you need them. Wait til there’s a little friction. Wait til there’s communication breakdown, and then add people in processes. In particular, the one I’m going to emphasize, and the one I know that people in the Agile world are very attuned to is this notion of how you form teams, especially team size. There’s this expression, at least that I learned when I was a kid, that many hands make light work. If you look at the evidence, this is probably a half truth. It might even be a dangerous half truth.

In particular, it’s interesting to look at the research on team size. We look at research on team size. This guy is actually on my dissertation committee, Richard Hackman. Richard’s 72. He’s been studying group effectiveness for 15 years in every known setting I can imagine. As he says, essentially his rule of thumb is that if you get more than 10 people on a team, you are really in trouble. You look at research on team effectiveness, probably four to six is the optimal number of human beings to work together. The example that I sometimes like to use is if you look at a Navy Seal’s fire team or combat teams throughout the world, the ones that they actually break people out in combat, there’s an argument over whether it should be four or five people, but after that, everybody agrees that it’s too complicated to have a group that’s any bigger than that when it’s under extreme pressure.

What happens, moving back to more traditional corporate life, and we’ve got a whole bunch of studies coming out about how bad team size is, is you get this situation where as the team gets bigger, the team will spend more and more time with the dynamics of the team and running the team and less and less time actually doing the job. It is one of those things that by actually getting rid of people, you may actually be able to move faster. As the quote says, this is also Apple gospel. I’m sure given this audience, many of you have heard of the mythical man [inaudible 00:45:48], the notion that when you add more people to a late software project, it gets even later. It’s again, because of these friction issues.

The other thing, which is always, I think good to know about, something that was popularized by Malcolm Gladwell, is something called Dunbar’s number. This is sort of some cool research done by an anthropologist. Basically what he showed is we human beings, the size of our brains, our frontal cortex, we can’t deal with more than about 150 relationships at once. We can’t remember them. We can’t maintain them.

It’s one of those things that he sort of proposes a hypothesis, but the evidence keeps getting stronger and stronger to support it. To give you two completely different examples, my colleague Huggy Rao who’s always reading weird history, he found a whole bunch of stuff on pirate ships in the Caribbean, and it turns out that they believed in the Caribbean that a pirate ship captain could not handle more than 100 sailors, so if it got to 120 or so, what they do is go find another ship, steal it, and then divide up the group, because that’s all that a captain could handle.

Going to sort of the more modern era, there’s a pretty cool study just published of 1.7 million users. This isn’t like followers. They looked at the maximum number of relationships people could sustain by the messages going back and forth. Again, you see the Dunbar number is like 100 to 200.

Okay, so that’s cognitive load. The next one is something, and for those of you, I have a PhD in psychology, for those of you who followed psychology over the years, at least when I was a psychology major, they would teach us there’s no such thing as unconscious mind, preconscious behavior. That was a bunch of Freudian nonsense. It’s not true at all.

Well it actually turns out there’s a whole, huge body of research that shows that we human beings are strongly affected by things that are around us that we don’t notice or we barely notice. It’s sort of like unconscious behavior is back in the psychology world. In particular, where this gets to spreading a mindset is that the way you want people to think and the like, by designing in things that they barely notice, it can have a huge effect on their behavior. Let me just give you a quick example of two of my favorite studies.

First of all, this was a cool thing that was done in UK, in England in a wine store, actually the wine section of a grocery store. What they did is they randomly varied whether they played French accordion music or German oompah music. It was just sort of playing in the section. As the slide says, when the French music was playing, people bought five times more French wine. When the German music was playing, the bought twice as much German wine. Just as you see in all these studies about unconscious, preconscious, whatever you want to call it, behavior, the people who bought the wine reported not hearing the music and denied that it affected their behavior. That’s the idea of you can built things in that can affect people’s behavior.

The other thing, and if you really want to be careful about something that can have a huge affect, and people don’t even realize it, you should talk about money, and by the way, in reading some of this stuff about Agile, I know that financial incentives are a big part of it, but there’s an argument you should have them but maybe not make them too vivid because some of the implications of research on money are pretty scary.

The best study I know, it’s actually a group of nine studies done by a woman named Cathleen [Boss 00:49:36], and her colleagues, this is from Science Magazine. They did a bunch of little experiments where what they did is they sort of brought people in a room, and they’d have them do various tasks, but the main thing they would vary was just whether money was around. This actually Monopoly money. They’d just have stacks of monopoly money, pictures on the walls with posters of money. They’d give them little tasks. One of my favorite sort of stupid ones is that the experimenter spills a cup full of pencils, and they count how many pencils that the research subject picks up. It turns out that when there’s just money around, people get more selfish. A whole bunch of other things like when there’s money around, people are less likely to ask for help. They’re less likely to give help. They’re more likely to sit further away from others. When given a choice to do something alone or in cooperation with others, they’ll choose to work alone more often.

This must have to do with the ingrained mindset that goes with what money means. When money gets more vivid in our minds, even though we’re not aware of it because none of the people in these experiments were aware this was affecting their behavior. It leads to selfishness and also this focus on self sufficiency, which isn’t all bad, but I think it’s important to understand how this could spread the mindset.

To end this up, it’s interesting in looking at Howard Schultz’s onward memo where he lamented the demise of Starbucks, as the quote says, he talks about the notion that when they started going to bagged coffee, and got rid of the coffee grinders, the smell and the sound of coffee grinding went away from the place, and that sort of undermined the experience in a way that although it made it more efficient, it got rid of some little subtle cues that made it a more enjoyable experience.

The message here for me is for Agile or for anything else you’re trying to spread, think of the little sort of cues that you’re sending in terms of the kind of language you use, the way the physical space looks. This could really have a strong effect on behavior.

Okay, the next one is a pretty simple one. Certainly in reading the Agile stuff this is all over the place, but whenever excellence spreads, and this is back to our air war versus ground war analogy, it’s not like you blast people with the speech or the concepts, and you just sort of leave them, and they figure out how to do it. Just about always, you’ve got one, maybe two little groups that have the kind of excellence that you want, and they slowly convert and mentor individuals one after another. We call this connecting and cascading. In the institute for health improvement campaign, they would do this thing where what they would do would be they would identify hospitals that were really good at, let’s just say, dealing with the respirator issue that I talked about, and they’d label them as experts. Then they’d fine some other hospital and connect them to the group of experts, and literally, they’d have one group mentor the next one, and that’s how they spread these practices.

The one thing I didn’t mention was the institute for health improvement only had about 150 people, and they were working with 3,200 different hospitals, so they had to get the customers to do the work, if you will.

Another example, and this is a fast food chain I worked with some years ago. They did this brilliant thing in a pilot study, large fast food chain. What they did was they had franchisees who had really bad cost, quality, and so on numbers, and really good one. They matched them demographically. This was a big enough chain, you could do it. What they did was they provided quite a large financial incentive for the people who ran the good franchises to convert the bad franchises. I thought that was a pretty good way to sort of spread practices, sort of like the classic thing. They did a pilot study. It actually worked great in about 20 cases. Then the CEO died, and then the thing went to the wayside because it was his pet project, but it did work.

Then you could have somebody like Zinga for sort of growing your organization. At Zinga they have the philosophy if you want a promotion, you got to grow your own replacement first. One bit of advice here, and at least looking at the Agile stuff I looked at, and believe me, I am no expert on Agile or Scrum or XP, one of the things I was wondering about is when you’re rolling this stuff out, how do you get diverse people involved?

Because at least in the situations where we see stuff spread throughout an organization or a network, some sort of practice or procedure, some kind of excellence, it turns out that one of the biggest mistakes people will make is they’ll pull together an initial team or an initial group, and they’ll all be exactly the same. They’ll be white males from the same department who have known each other for years, who have all exactly the same interests. So how is it supposed to spread? It actually turns out because we as human beings are so attracted and tend to associate with people like us, because of that, there’s the argument that you have to have as diverse of people as possible and from as many different parts of the organization as possible if you want to set the stage for spreading.

This is why I’ve got a picture of Bonnie’s team from Jet Blue, the first 20 or so who she brought together to try to work on dealing with these irregular operations, the shut downs at Kennedy. She on purpose, picked people who were not only from different parts of Jet Blue, but people who had been at Jet Blue for a long time, people who had been there a short time. She was careful to have both women and men, as you can see from the picture, cynics and believers, things like that. Her perspective was that the more variation she got, that the bigger wallop she could have as she sort of rolled it out. This turned out to be true. That’s the argument, if you’re going to connect and cascade, start with a few diverse groups who are connected to a lot of different parts of the organizations.

Okay. This is the second to last one. We’re about 10 minutes from the end, and then hopefully you’re thinking of your questions and comments because we’re going to have plenty of time for that. This is my colleague Huggy Rao’s perspective. I love this line. “The mindset is the steering wheel.” Those sort of over arching shall and shall not’s that come with the mindset, they tell you which directions to go, which directions not to go, so it’s sort of the steering wheel. Let’s face it, although as we’ve already seen, money can be a dangerous thing. The fact that is incentives, some sort of motivation needs to be used to push people forward. One of the things that’s coming out actually in a lot of corners of the behavioral sciences is although money is almost too good a motivator sometimes, a lot of times the reason money works or what motivates human beings in general is because we have strong needs for pride, we want to feel proud of ourselves, and we want the people we care about to feel proud of us, or we want to avoid shame and embarrassment.

That notion of well use the money, but always be thinking about how can I embarrass them or how can I make them proud. Just as an example, this isn’t in the slide deck. I just read this yesterday. There was this famous mayor of Bogota who turned things around. He did all these sort of crazy things that were around pride and shame to get the citizens in that city to be less crazy. Two of the things he did was he hired mimes, and what the mimes would do when people would do things like jaywalking or do crazy things, the mimes would imitate them to embarrass them to show them how stupid their behavior was. The other thing he did was he handed out thousands of red cards, like soccer red cards, and green cards, and had the citizens hand out these red cards to one another to get one another to change their behavior. It actually seems to have worked.

As another example in a smaller setting, I already mentioned Ben Horowitz, so let me give you some background on this. For better or for worse, being in the Stanford engineering school and being connected to venture capitalists, I’ve had a lot of venture capitalists as class guests, and I can tell you, they are not very polite people. When I have a venture capitalist as a class guest, I do two things, number one, I hate to say this, I lie to them about when they’re supposed to be there because they’re always so late, usually by as much as half an hour, and maybe they’ll be half an hour late, and I’ll get part of them. Not, always they drop out, that I always have a separate backup plan if they drop out. As a group, they don’t have a very good reputation.

Ben Horowitz, I’ve already mentioned, I actually invited him to talk in one of my classes, and I kept sending him emails saying, “Are you going to show up? Please show up.” Anyhow, I told him to show up a half an hour early, but he’s always half an hour early, so he showed up an hour early, which I’ve never seen a venture capitalist do. He also brought his wife and his father, so it’s like this whole weird sort of thing. I started talking to him, and I basically said, how come you’re not rude like most of the venture capitalists in the Valley? He said this is like one of my rampages. One of the other ways in which they’re rude is they’re famous when you’re an entrepreneur, when you pitch an idea to a company, that the venture capitalists are always late, and they also never give you a decision. They just don’t call you back if they don’t want it.

He’s doing this thing at Andres and Horowitz that when his associates are late, as the slide says, he charges them $10 a minute and has them pay for it on the spot. He said it’s not one of those things where I say I’m going to donate it to a charity or something, I keep the money. That’s how I do it. The concept, it’s not working, because frankly, these are Silicon Valley venture capitalists. They can afford the $10. It’s the embarrassment.

Just in thinking, Huggy and I have been thinking about this a lot. We’re actually right in the middle of working on a chapter on incentive, what really motivates people? To us, it’s money, pride, shame. There’s another little thing that I’m not quite being explicit here, which is this feeling that people are going to be held accountable for doing the right thing, and their colleagues are going to hold them accountable. That felt accountability is a big thing.

Okay, so the last one. This has been an obsession in many things that I’ve done, and Huggy and I are especially obsessed with it in this case, is that when we’re talking about scaling up excellence, there’s this argument that we would make that a lot of what scaling up excellence is about is getting rid of bad things, descaling bad behavior. The problem is when you’re trying to scale up anything that’s good, when there’s bad stuff around, it could be anything from incompetence to people being emotionally nasty, sort of the asshole problem. It could be people being depressed, that they bring everybody down. It could be people engaging in unethical behavior.

If you look at behavioral science literature, there’ this great line, and this is the name of the article. If you send me an email, I’ll send you the original academic article. I always send out this article. I love it. “Bad is stronger than good.” What this research shows is sort of pick your bad behavior, bad mood, whatever it is, being lazy, stealing, pick what you want. It turns out that bad behaviors, they tend to be ingrained more deeply. They tend to be more contagious. They tend to be more difficult to get rid of. There’s this argument that if you’re going to spread excellence, a lot of what your job is is to get rid of the bad behavior that exists, and when little hints at it, to nip it in the butt.

Just to give you some of the research that backs this up, this is a huge body of literature. This actually extends to marital relationships and relationships with the loved ones in our lives. It turns out that when they do a study of dating relationships, marital relationships, and other long term relationships, that if you’re in a situation where for every bad interaction you have with your partner, you don’t have at least five good interactions, things do not look good for you in the long term. As a guy who’s been married for 28 years, what I tell myself if when I’ve been bad, I’ve got to be good five times in a row. If you look at the research, it’s probably kind of the minimal.

If you go to this workplace research, back to this five to one rule, the research shows that when we have an unpleasant interaction with one of our co-workers, that it packs five times the wallop on our mood than a good interaction. Another bit of evidence with this research, which I think gets us to some of the issues with teams, and Agile and the like, if you’ve got a really destructive team member, we’ve got a lot of evidence that if you can’t reform them or can’t get rid of them, you’re really in trouble. It turns out that just one sort of deadbeat, one jerk, one person who’s kind of an Eeyore type, who’s depressed all the time, that one person can bring down your performance by 30 or 40%.

The reason is it’s sort of like the team size literature. It turns out that when you’ve got one of these destructive characters on your team, what ends up happening is you spend too much time dealing with the destructive character and not enough time actually doing the work. Then the second thing I should have added, and this is especially true for people who are nasty and are depressed, it turns out that bad behavior, it’s really contagious. There’s two reasons you got to deal with it.

I also love this cheating study. This is a great longitudinal study of cheating done at UCLA over multiple quarters. What they found out with 1,200 students is if you’ve just got one friend who encourages you to cheat in your social network somewhere, your chances of cheating that quarter go up 32 times.

The message here is if you’re going to scale up excellence, you got to get rid of the bad stuff and to turn to a more specific case, one of the class guests we had in our scaling up excellence class was a guy named Barry Feld, who actually just sold the 152 or so Cost Plus World Markets that he had to Bed, Bath, & Beyond. So he just sold the company. We just had him a few months back before he did. When he took over, Cost Plus’s stock was under a dollar. He’s a long term sort of retail guy. What he did being a good retail guy, he visited every Cost Plus store.

Huggy and I said to him so what was the bad stuff you looked for in Cost Plus stores to get rid of? He said, “I looked for two things that I would work to attack immediately.” The first one was, he said, “When I walked in, if they didn’t greet me, that was really bad,” because he said, “There’s a lot of evidence that when people are greeted, number one, they steal less, and number two, they buy more.” I didn’t know that, but it kind of makes sense. You have a little personal connection with the person. He said I’d worked on that, and the other thing he said I would do, and he sort of joked, “People thought I had a bladder problem everywhere I went.” He’d always asked to go to the bathroom. He said the reasons the bathrooms were important is if they were sort of messy, that was a sign that they didn’t care about a whole bunch of other things. By working on those two bad things for starters, it helped turn around the stores.

I think they got the stock up to 20 and sold it to Bed, Bath, & Beyond. The more general lesson for scaling is this notion that we always think about spreading good things in everything. A lot of your jobs when you’re scaling stuff, if you will, is to eliminate the negative because it overwhelms the positive so much.

Okay. There’s the scaling principles. I’ve got a couple of wrap up comments, and then hopefully we can have some questions and comments because I’ve been ranting at you for quite a while. Okay, a couple of scaling traps. I already warned about this one, but this is the sort of, it actually comes from research on insects partly. You got to be careful about mistaking swarming for scaling, and especially [inaudible 01:06:07] your executives are just fantastically bad at this. They think that if they have a big convention or they have a kickoff period or a short program, that they’re done, all that you’ve done is sort of raised awareness in getting people excited about it. You got to do that ground war stuff and grind it out, which brings me to the second point, which is that when people start saying to us, I want to scale it up really quick and really fast, I start getting nervous about that, because to me, that means they’re going to start looking for the easy way out, and at least in every situation where we’ve looked where excellence has scaled up in an apparently rapid over night fashion, almost always they’ve sort of done the ground war.

It’s interesting because at least to me, I mention Facebook, and as an outsider, it was like Facebook grew so fast. That must have all been so effortless. Talking to Chris Cox and [inaudible 01:07:03], their head of engineering, the amount of effort that they put in fighting every day to maintain the strong engineering and technical culture that they believe is the heart of that company is something that they’ve worked on from the very very earliest days. You can see if they’re spending six weeks training and brainwashing engineers before they’ll let them go to their regular job or actually even let them pick their regular job for them. They’re still sort of taking that seriously. As I said, we’ll see what happens with them, but I think it’s interesting.

A final point, and then hopefully we can have some questions and reactions. Huggy, my co-author, his mother was a math teacher. We always have this math stuff that comes up. Brilliant math guy in general. It’s this notion that when you think about scaling, it seems like bigger, more, better, add, add, add. But actually, if you look at situations where people scale up excellence, they’re almost always doing equal measures of subtraction. We think of this as getting rid of the skeletons in the closet, scraping off the barnacles, getting rid of the stuff that worked in earlier stages that you don’t need anymore, so making things less cognitively complex. For us the lesson with scaling is to try to figure out how to have that balance between spreading things out while always, it’s the [inaudible 01:08:27] lesson, always cutting out stuff you don’t need to the extent possible.

Okay, so I think it’s time for us to move to some comments and reactions. You’ve been a great audience. You were very patient. But I bet you will learn more from what you say than what I say. I’d love to hear what your comments and questions are. Thank you.

All right. I can’t see a thing, so you’ve got to yell at me. It’s like the lights they blind you.

Speaker 2: My name is [inaudible 01:09:08]. This is about Dunbar number. You said that the number’s around 100, so this is an observation that the number of people we can relate with is increasing as social media are playing their role now. I can remember the number of people with whom I related when social media didn’t exist, and the number of people I can relate to today. Is this a universal number, or is it going up?

BobSutton: If you remember, I described a Twitter study that focused on how many actual Twitter relationships you can maintain. That means that you can remember their name, and that means you can actually maintain a somewhat regular interactions with them. The Twitter study was it looks like 100 to 200. You might have 50,000 Twitter followers, but in terms of the number you can actually maintain the relationships with, it probably isn’t going up. What it gets to is the size of the cerebral cortex, that we can only deal with so many relationships. I won’t use the name of the company, but I will give you an example. You would all recognize the name of the company.

There’s a company, I don’t work with them, but a good friend of mine is consulting with them heavily, and this is one of those companies to say something snide about New York. They’re New York, they’re in financial services, and they really do think they’re smarter than you are. They think they’re smarter than the rest of us. They started believing that they could handle bigger groups. 30 people groups, and have people be in leadership position where they had hundreds and hundreds of people reporting to them without much middle structure. Well guess what happened, things started falling apart because they had so many communication problems and nobody knew what the hell was going on.

I would submit to you that I’m ready to see the evidence that our brains are getting bigger or social media is making this easier, but to me, there’s a difference between how many people you can broadcast to versus how many you can maintain close enough relationships with that you can influence and manage and so on.

If anybody’s ever been in a company, and I think of [inaudible 01:11:30], a company I’ve worked with for years. There was that moment when[inaudible 01:11:33] went from 40 to 100 people, and all of a sudden, he couldn’t figure out who was running around. I’m skeptical. I may be wrong, but I’m skeptical. Other comments or questions? That’s a good one actually. I don’t believe it, but I’m waiting for the evidence.

Speaker3: One of your colleagues at Stanford, Jim Collins, wrote a series of books Good to Great, Built to Last, on what it takes to make great organizations. The question is do you find any of your work that differs from what he says? We talked about cultural mindset and sustaining that across an organization.

BobSutton: I know Jim Collins’ books, and I certainly admire them. I think his best book is his new book with Morten Hansen. The way that I think about the stuff I do and how it’s related to Collins, and I talked with Morten Hansen about this recently, is the Collins stuff is, it’s at a very high level and very abstract. It doesn’t describe very much about the details about what you actually need to do on an every day basis.

I’ll give you a specific example. One thing that Jim Collins is famous for is big hairy goals. [BHGs 01:12:46]. We’ve all heard [BHGs 01:12:47]? My perspective on big hairy goals is it’s nice to know the direction you’re going, but if you just give human beings big hairy goals, there’s a lot of evidence, what happens is they freak out and freeze up, they don’t know what direction to go. If you look at what great leaders do, they spend less than one percent of their time thinking about or developing big hairy goals. They spend 99% of their time on implementation.

I’ve had this discussion with Collins. I think the big hairy goals are great, Jim, but it did a disservice because what you end up with people is they think they’re level five leaders because they keep talking about these giant goals, but they don’t actually give people a road map to actually help them get there.

The story we just heard about, Bonnie [inaudible 01:13:37], and what she did to finally fix the problem at Kennedy, they knew what the big hairy goal was, they just needed to figure out the path to get there. I probably agree with Collins on most things.

I guess the other thing I would disagree with Jim Collins on is I think he emphasizes the importance of CEO’s way too much. He makes it sound in Good to Great that that’s like 75% of the action, and we have much better evidence than he’s published that CEO’s are probably at most worth 10% of the action and organizational performance. I think that he exaggerated the findings. By the way, Morten Hansen agrees with me on that. Morten’s the guy who wrote the next book with him.

But on the whole, I think Collins books are pretty good. I just find them too vague to be useful sometimes. Is that fair? Where’s my guy? I can’t see him.

Another question, comment?

Speaker 4: I have a question here. I’m over to the other side. This way.

BobSutton: It’s amazing how blind. Thank you. I see you.

Speaker 4: My question relates … I just joined a medium to small size company, but they’ve got floods and floods of email that’s going to all sorts of different groups, and people are on so many lists and stuff. It strikes me as a big cognitive load with the amount of email everybody has to process every day. I’m interested, are there studies on that, or do you have experiences or stories about people being overloaded by email?

BobSutton: I’m not an expert on email. In my department at Stanford, the person right actually next to me, Pam Hinds, she does all this stuff on social media.

Speaker 4: Oh okay.

BobSutton: I’ll parrot her perspective, which I think is right. It’s like the curse of our time. On the one hand, I don’t think there’s any way to actually do managerial work or be a team member without being fairly obsessive about your email, especially if you’re doing interdependent work. The challenge is to try to figure out when to shut it off and when to ignore people. It’s one of those things I can’t help you with very much because all the evidence is, to me the definition of an incompetent manager or team member is somebody who never answers their email. Basically, email, I mean I know there’s Facebook, I know there’s Twitter, I know there’s all this stuff, but the fact is that email is the main way that most people in most organizations still do their work.

I mean you could have norms about not sending replies to all. You can have norms about keeping them shorter, but I wish I could help more. I have days of my life ruined by trying to keep up with my email, so I don’t think I’m very helpful. Do you have any suggestions?

Speaker 4: Just the same kinds of things about trying to be careful about not copying everybody into everything and changing the subject and those kinds of stuff, just normal stuff. Like you say, partitioning it off to certain times of day when you read and catch up.

BobSutton: By the way, Pam says there is good news about email. I know it’s all a lot of bad news, but there is some good news. This is an asshole issue. It turns out that when email first came out, there were many more problems with flaming and misunderstanding than they’re used to be. What’s happened is since all of us have been using it for so many years, they’ll be studies, and they’ll look and see that the percentage of emails where people are being insulting and nasty has gone way down. Also, the percentage of misunderstandings has gone down. That might be part of the curse, too. One of the reasons we’re using it even more is because we’ve gotten better at it.

Maybe that’s not all good either. I’m sure and I know that email flames still happen, but it really looks like the curve keeps going down and down, so we are learning something as a species someplace, at least in email.

Speaker 4: Thank you.

BobSutton: Thank you. One more question.

Speaker5: Hello, I’m [inaudible 01:17:53]. Here. Do you see me?

BobSutton: I’m a deer in the headlights. I like the hands though, keep screaming.

Speaker 5: Okay. I’m [inaudible 01:18:07] from Japan, and I’m a big fan of your No Asshole Rule, and also [inaudible 01:18:14] CEO when I was a new hire. I have a question about your talk about a jerk in a team can reduce your team’s productivity 30 or 40%.

BobSutton: Can you say that again? I missed that sentence.

Speaker 5: Your slide said a jerk in a team can reduce your team’s productivity by 30 or 40%. Jerk … Sorry for that.

BobSutton: Should I talk about that? That comes from some research by a guy named Will Phelps where he did some experiments where he randomly put in actors into teams who were either depressed, incompetent, or nasty, and he gave them, I’m trying to remember, the collective task, and he would see what happened to their productivity. It actually was a pretty controlled experiment. That was one of the better studies, but we’ve got also a whole bunch of evidence that as soon as you’ve got somebody who’s being rude or loud or by the way, narcissistic, selfish, the teams tend to shut down, and you tend to have less effectiveness.

Probably the problems with these studies frankly if we think of our friend the late Steve Jobs, is there are lots of effective assholes in this life. We all know that, but if you’re going to be on a team like that and have somebody who’s worth the trouble, they tend to have somebody who cleans up after them constantly and undoes the damage.

I think that’s what is missing from a study like that. That’s always my advice is if you’re going to be an asshole, bring somebody in your team to clean up after you, okay? I mean it works. Jobs always had them. Larry Alston has always had them. There are some people who are so smart, I guess they’re worth the trouble. I just don’t want to be around them. Okay. On that note, are we done? All right. Thank you guys very much. Thank you. You’re wonderful.